Editor's note: H&HN Daily, in partnership with the College of Healthcare Information Management Executives, is pleased to present ICD-10 In Real Time. In this 12-month series, three leading CIOs share their experiences on ICD-10 implementation, physician engagement, productivity, payer readiness and more.


At the CHIME Fall Forum a couple of weeks ago, I was impressed with the number of my peers whose organizations, like mine, are well underway with their ICD-10 preparations. I did, however, run into more than a couple of folks who are still betting on the possibility that the recently revised ICD-10 deadline will get pushed out again when the date gets near, and have yet to get started. I guess it could happen, but I wouldn't count on it.

By now, anyone who can spell ICD-10 knows that the new code set incorporates significantly greater specificity than its earlier version, ICD-9. We have read articles laying out scenarios where such specificity is taken to extreme — almost absurd — levels. It could happen, but, for a minute, I will ask that we forget the extreme examples, and that we examine the why behind the what.

The impetus behind health care reform is, has been, and will continue to be, to bend down the health care cost curve. As a nation, we just can't continue to spend at the rate we have been. Those of us who studied economics understand that the world is driven by incentives, and so is change. In today's reality, it is not uncommon that the avoidance of a test or a procedure of marginal clinical benefit results in diminished reimbursement, which equates to leaving money on the table in the eyes of the provider. Few people, if any, are naturally inclined to leave money on the table. There is no better incentive to drive down costs than that posed by a market's inability to pay higher prices. And we just might have reached that point. Health care reform relies heavily on data and on ICD-10 to incentivize providers to lower their costs.

If you have spent any time perusing your payers' websites (including those of CMS and your state's Medicaid program), you have read things like "ICD-10 CM and ICD-10 PCS codes will improve the ability to: govern reimbursement … optimize health care delivery…' Or, "ICD-10-CM/PCS incorporates much greater specificity and clinical information, which results in … improved ability to measure health care services … increased sensitivity when refining grouping … designing payment systems and reimbursement methodologies, processing claims…" Another, less politically correct way of saying it is: "We are spending too much money and ICD-10 will help us pay you less" (to be fair, in a world headed towards more risk-based reimbursement, it also means, "ICD-10 will give you, provider, the data that will allow you to analyze, learn and change your ways to make do with less money.").

Let's walk through a couple of examples:

In ICD-9-CM there are 9 codes (707.00 – 707.09) for pressure ulcer showing broad location, but not depth (stage). In ICD-10-CM there are 125 codes showing more specific location as well as depth (stages I-IV). It isn't hard to imagine a penalty for a progression in the wrong direction (in fact, many payers already impose these). In today's environment the lack of discrete data means the payer limits its inquiry to ask for documentation justifying the pressure ulcer being present on admission. With the additional discrete data, and in an attempt to incentivize better wound prevention/wound care, changes for the worse while under the care of a provider will likely result in negative impact to reimbursement -- even if a pressure ulcer is present on admission.

In ICD-9-CM there is one code for angioplasty (39.50), whereas in ICD-10-PCS there are 854 angioplasty codes specifying body part, approach, and device. A bit extreme, maybe, but regardless, this specificity will allow payers to do two things:

  1. Compare the cost of different ways to do a procedure (as well as the subsequent cost of providing health care to the people who have undergone that particular procedure).
  2. Adjust the price they are willing to pay for a given approach, presumably favoring lower cost approaches, and potentially penalizing higher cost ones.

It is true that further delays in ICD-10 mandates could be prompted by a massive lack of readiness on the payer and provider sides when the time comes. Only time will tell where things stand and how ready the industry is for Oct. 2014. But as I noted above, it appears that many provider organizations are well underway with their ICD-10 preparations and the extra year to prepare might have been just what the doctor ordered to get across the finish line.

So, the payers (including CMS, the 800 lb. gorilla, and the states) are serious because they are broke. Commercial payers are serious too, because their largest customers (employers) cannot afford the rising costs of health care if they are to maintain or regain a competitive edge in the global market. So given what's at stake and given the role ICD-10 plays, chances are we won't see further delays.

Payers, including fiscal intermediaries, have strong incentives to transition sooner rather than later and are working full steam ahead to meet the dates. Some will make it on time, others won’t. That means you will need to be ready to process ICD-9 and ICD-10 for a while. You don't want to underestimate your testing efforts. You know what general equivalence mappings (GEMs) Medicare will be using to convert ICD-9-CM databases to and from ICD-10-CM and ICD-10-PCS, and you will want to test with their fiscal intermediaries (note: CMS is not planning to use the ICD-10 Reimbursement Mappings as they are converting their systems to accept ICD-10-CM/PCS codes directly). You will also need to test whether your other payers are using modified GEMs and reimbursement mapping tools, and in the event they are (and they most likely will be), you should allow yourself ample time to run through various test/fix cycles. Coordinating your testing efforts will be no easy task, so pick up your phone find out where your payers are in their conversion efforts and get your payer contacts to book your slot in the testing calendar. The work ahead is not for the faint of heart. Then again, understanding the why behind the what, it is pretty apparent that the wait and see approach is a risky move.

If you haven't started yet (you know who you are) … well, you're probably not reading this anyway.

Albert Oriol is chief information officer at Rady Children's Hospital San Diego. He's a regular contributor to H&HN Daily's ICD-10 series.